Aus­ter­ity in Europe, and the rules and reg­u­la­tions com­ing from Brus­sels are part of the Ger­man eco­nomic sys­tem — the Social Mar­ket Economy.

Merkel says in her New Year speech that she hopes (read “is mak­ing sure”) there will be more con­trols next year on inter­na­tional finan­cial mar­kets — a pop­u­lar issue in Ger­many that the SPD is plan­ning to make a cen­tral plank of its 2013 elec­tion campaign.

“The world hasn’t suf­fi­ciently learned the lessons of the dev­as­tat­ing 2008 finan­cial cri­sis,” she said (is she going to ‘teach’ the world??).

“Never again can we allow irre­spon­si­bil­ity like back then to hap­pen. In a social mar­ket econ­omy, the State is the guardian of order — and that is some­thing peo­ple should be able to count on.”

Germany’s plan after killing cap­i­tal­ism, partly by push­ing for end­less rules on bank­ing, is this;

Instead of a dynamic, grow­ing pot of wealth and ever-increasing resources, which can enable larger and larger pro­por­tions of the pop­u­la­tion to become pros­per­ous with­out tak­ing any­thing away from any other group, there will indeed be an absolute limit on the amount of cap­i­tal cir­cu­lat­ing within the society.

The only deci­sions to be made will involve how that given, unal­ter­able sum is to be shared out – and those judg­ments will, of course, have to be made by the state since there will be no dynamic eco­nomic force out­side of gov­ern­ment to enter the equa­tion. Wealth dis­tri­b­u­tion will be the prin­ci­pal – vir­tu­ally the only – sig­nif­i­cant func­tion of polit­i­cal life.

The total absence of eco­nomic growth would mean that the lim­i­ta­tions on that dis­tri­b­u­tion would be so severe as to require dra­con­ian legal enforce­ment: rationing, lim­its on the amount of cur­rency that can be taken abroad, import restric­tions and the kinds of penal­ties for eco­nomic crimes (under­cut­ting, or “black mar­ket” sell­ing prac­tices) which have been unknown in the West since the end of the Sec­ond World War.

As the fixed pot of national wealth loses ever more value, and resources shrink, the mea­sures to enforce “fair” dis­tri­b­u­tion must become more total­i­tar­ian: there will have to be con­fis­ca­tory tax­a­tion on assets and prop­erty, col­lec­tivi­sa­tion of the pro­duc­tion of goods, and directed labour.
Demo­c­ra­tic social­ism with its “soft redis­tri­b­u­tion” and expo­nen­tial growth of gov­ern­ment spend­ing will have paved the way for the hard redis­tri­b­u­tion of dimin­ished resources under eco­nomic dictatorship.

Con­sider from that per­spec­tive, what asso­ci­at­ing every human move­ment with car­bon emmis­sions really means. Ever tight­en­ing car­bon allowances will shrink coun­tries and pop­u­la­tions by legal force. The Eco move­ment is a tool of the same eco­nomic sys­tem being pushed on people.

http://www.germanywatch.blogspot.co.uk/2012/10/german-economic-imperialism-social.html

http://germanywatch.blogspot.co.uk/2012/12/merkel-new-year.html

Didn’t every­body hear the great news? The worst of the euro­zone cri­sis is behind us. Aus­ter­ity works! Appar­ently!

Wash­ing­ton Post
Euro­pean lead­ers hail break­through in debt crisis

By Anthony Faiola and Edward Cody, Pub­lished: Jan­u­ary 5

LONDON — LONDON —

After more than three years of global mar­ket tur­moil, polit­i­cal upheaval and nail-biting sum­mits, Euro­pean lead­ers are declar­ing that the worst of the continent’s debt cri­sis is behind them.

In New Year’s speeches and con­grat­u­la­tory com­ments, lead­ers across the region are cred­it­ing fresh rounds of painful aus­ter­ity, a hard-fought new role for the Euro­pean Cen­tral Bank and steps toward deeper inte­gra­tion with achiev­ing a breakthrough.

Bor­row­ing costs for trou­bled nations, they note, have come down steadily from last year’s dan­ger­ously high lev­els, pulling a string of coun­tries back from the brink of immi­nent finan­cial col­lapse and defy­ing naysay­ers who pre­dicted a quick breakup of the euro zone last year.

Yet any sug­ges­tion of vic­tory in Europe may be viewed as the eco­nomic equiv­a­lent of Pres­i­dent George W. Bush’s “Mis­sion Accom­plished” speech on Iraq aboard the USS Abra­ham Lin­coln in 2003. Though mar­ket panic is sub­sid­ing, the region appears to be sim­ply trad­ing a cri­sis of finan­cial mar­kets for one rooted in its ail­ing economies.

Con­fronting the real­ity of deep bud­get cuts, higher taxes and piles of debt that have hin­dered any prospect of recov­ery, Italy, Spain and Greece are bat­tling what econ­o­mists pre­dict will be yet another year of bru­tal reces­sion. Spain, in fact, may face a down­turn even worse than the one seen in 2012, with its still-troubled regions and banks poten­tially prompt­ing a bid for fresh bailout assis­tance. Even mighty Ger­many and France, the anchors of the 17-nation euro zone, poten­tially face weaker growth or stag­na­tion this year.

...

Every­thing is going to be get­ting bet­ter from here on out. Mis­sion Accom­plished!

The lat­est mes­sage from the ECB appears to be:
1. The euro­zone finan­cial mar­kets are back to ‘nor­mal’. Bor­row­ing costs have fallen from their crisis-level peaks and, while this hasn’t actu­ally led to lower unem­ploy­ment, offi­cials hope the improve­ments in the finan­cial mar­kets will even­tu­ally trickle down into the real econ­omy. Some­day. Yay!
2. The ECB will not engage in any new stim­u­lus and will instead be stick­ing with its sole man­date of low infla­tion or eurozone-wide “price sta­bil­ity” (except for times when the focus on “price sta­bil­ity” cre­ate crises that under­mine faith in the euro itself).
3. The long-term solu­tion to the record high unem­ploy­ment rates in many euro­zone coun­tries — with youth unem­ploy­ment near­ing 60% in Spain — is to reform labor laws that make it eas­ier for com­pa­nies to fire older work­ers (prob­lem solved!).

In other words, the phi­los­o­phy of “just barely enough help at the last minute to avoid com­plete finan­cial cat­a­stro­phe with­out any real regard for the real (non-financial) econ­omy” is still guid­ing the poli­cies at the ECB:

WSJ
Updated Jan­u­ary 10, 2013, 3:59 p.m. ET

Europe’s Bank Damps Talk of New Stim­u­lus

By BRIAN BLACKSTONE

FRANKFURT—A united Euro­pean Cen­tral Bank sent a strong sig­nal that it is unlikely to cut inter­est rates despite eco­nomic con­trac­tion and record unem­ploy­ment, sug­gest­ing the euro-zone econ­omy must find its own foot­ing with­out addi­tional help from the cen­tral bank.

...

“We are now back in a nor­mal sit­u­a­tion from a finan­cial view­point, but we are not see­ing an early and strong recov­ery,” he said.

...

Offi­cials voted unan­i­mously to leave their key lend­ing rate at a record-low 0.75% and announced no new stim­u­lus mea­sures.

One month ago, Mr. Draghi said there had been a “wide dis­cus­sion” and “pre­vail­ing con­sen­sus” on inter­est rates, sug­gest­ing some mem­bers favored a cut in December.

Thursday’s deci­sion “implies there was no request for a rate cut,” Mr. Draghi said. He ticked off a num­ber of pos­i­tive devel­op­ments in the past six months: lower bond yields; renewed cap­i­tal inflows; ris­ing bank deposits in South­ern Europe; and improve­ment in sen­ti­ment mea­sures.

“His mes­sage was very clear: do not expect more stim­u­lus from us,” said Chris­t­ian Schulz, econ­o­mist at Beren­berg Bank.

Gross domes­tic prod­uct has failed to expand in the euro zone since the third quar­ter of 2011. It is expected by econ­o­mists to have declined sharply in the fourth quar­ter with the region’s largest econ­omy, Germany—which has so far with­stood the three-year-old debt cri­sis with strong growth—sliding into contraction.

But Mr. Draghi said the improved health of finan­cial mar­kets “should work its way through to the econ­omy” and that global demand should strengthen, boost­ing exports.

...

The hope is that lower government-bond yields will trans­late into reduced bor­row­ing costs for house­holds and busi­nesses, fuel­ing new spend­ing, invest­ment and hir­ing. Yet there is lit­tle evi­dence out­side of busi­ness sur­veys that the improve­ment in finan­cial mar­kets is spurring renewed activ­ity in South­ern Europe.

The euro zone’s unem­ploy­ment rate rose to a record 11.8% in Novem­ber, and there are deep divi­sions within the 17-member cur­rency bloc. Spain’s unem­ploy­ment rate is 26.6%, com­pared with 5.4% in Ger­many. Nearly 60% of Span­ish youths are with­out work, com­pared with 8% in Ger­many.

There is lit­tle the ECB can do to bring these rates into bet­ter bal­ance, Mr. Draghi said, not­ing that the ECB’s sole man­date is to keep infla­tion low. Labor-market poli­cies that pro­tect older work­ers have forced young peo­ple to bear the brunt of the adjust­ment to weaker eco­nomic growth, he said, while a lack of mobil­ity has pre­vented work­ers in strug­gling coun­tries from seek­ing work else­where in the euro zone.

“Mon­e­tary pol­icy can­not do much about that,” he said.

Despite hav­ing inter­est rates at record lows, the ECB has refrained from the types of aggres­sive mea­sures other cen­tral banks are tak­ing to safe­guard their economies. The Fed­eral Reserve is buy­ing mort­gage bonds to bring unem­ploy­ment down. The Bank of Japan is buy­ing large amounts of assets, includ­ing gov­ern­ment bonds and real-estate invest­ment funds. Switzerland’s cen­tral bank has pur­chased cur­ren­cies of other coun­tries in order to hold down the level of the Swiss franc.

...

It’s also worth point­ing out that a Mitt Rom­ney vic­tory in 2012 could have imposed this same “price stability”-only bind on the Fed­eral Reserve. It’s a reminder that this bizarre push to impose aus­ter­ity and bank bailouts to ele­vate “finan­cial health” over the actual health of the econ­omy and its cit­i­zens real health is a global agenda:

Fed’s dual man­date on the table in wake of QE3
The Fed
Sep­tem­ber 19, 2012|Greg Robb, MarketWatch

WASHINGTON (Mar­ket­Watch) — Two top Fed­eral Reserve offi­cials who opposed the lat­est round of Fed asset pur­chases have waded into tricky polit­i­cal waters by sug­gest­ing that law­mak­ers could tie the Fed’s hands if they wanted to block more asset purchases.

“A future Con­gress might restrict us to a sin­gle man­date – like other cen­tral banks in the world oper­ate under – focused solely on price sta­bil­ity,” said Richard Fisher, the pres­i­dent of the Dal­las Fed­eral Reserve Bank in a speech on Wednes­day night in New York.

Ear­lier in the week, another regional Fed bank pres­i­dent, James Bullard of St. Louis, was even stronger, say­ing he sup­ported restrict­ing the dual man­date to a sin­gle inflation-fighting goal.

Bullard said sup­port­ers of QE3 had placed too much empha­sis on the Fed’s abil­ity to bring down unem­ploy­ment. He said mon­e­tary pol­icy, in real­ity, could only have tem­po­rary effects on the job­less rate. His com­ments came in an inter­view with Reuters.

At stake is the Fed’s oper­at­ing char­ter that calls for the cen­tral bank to con­duct pol­icy with two goals, or man­dates: keep­ing unem­ploy­ment low and infla­tion sta­ble.

With the Fed’s tra­di­tional tool to adjust the econ­omy — the fed­eral funds rate — stuck near zero, Fed Chair­man Ben Bernanke has launched uncon­ven­tional asset pur­chases to bring down long-term inter­est rates and boost the economy.

Last week the Fed launched a third round of quan­ti­ta­tive eas­ing under which it will buy $40 bil­lion per month of mortgage-backed secu­ri­ties. The pur­chases have so far boosted bank reserves by an excess $1.6 trillion.

Bernanke has jus­ti­fied the Fed’s asset pur­chases by say­ing the cen­tral bank is try­ing to meet its low unem­ploy­ment man­date. The unem­ploy­ment rate has been stuck above 8% for 43 months.

...

The mat­ter is not sim­ply academic.

With the base of the Repub­li­can Party this year very anti-Fed, a Rom­ney vic­tory in Novem­ber would likely spark efforts to limit the Fed’s pow­ers in mon­e­tary pol­icy and bank­ing reg­u­la­tion, experts said.

“Many Con­gres­sional Repub­li­cans seem eager to tie the Fed’s hands and Bullard is play­ing into that,” said Joseph Gagnon, a for­mer Fed staffer and now a senior fel­low at the Peter­son Insti­tute for Inter­na­tional Economics.

House Repub­li­cans have already intro­duced leg­is­la­tion to end the Fed’s dual man­date and vice-presidential nom­i­nee Paul Ryan has been advo­cat­ing the mea­sure in recent cam­paign appear­ances.

...

Yes, the EU’s lead­ers are seri­ously prep­ping for another round of blood­let­ting and prayer to the Con­fi­dence Fairies. Oh Con­fi­dence Fairies, please accept our human sac­ri­fices so they our peo­ples may be pure and vir­tu­ous and spared from your wrath:

Bud­get cuts must go on, says EU’s Rehn

Jan­u­ary 12, 2013
Reuters

The worst of the euro­zone debt cri­sis may be over, but gov­ern­ments must not let up on reforms or bud­get cuts if they want to put the tur­moil firmly behind them, the EU’s top eco­nomic offi­cial said on Friday.

In a speech to diplo­mats and indus­try offi­cials, EU Eco­nomic and Mon­e­tary Affairs Com­mis­sioner Olli Rehn called for pri­ori­tis­ing invest­ment, fight­ing youth unem­ploy­ment, con­tin­ued reduc­tion of bud­get deficits and tighter eco­nomic inte­gra­tion of the 17-member sin­gle cur­rency area.

“Our patient may be out of inten­sive care, but it will still take some time before she can be given a clean bill of health,” Rehn said. “That’s why any lapse into com­pla­cency would be unfor­giv­able. We need to stay the reform course to revi­talise the Euro­pean econ­omy,” he added.

To over­come the cri­sis, the euro­zone agreed last year in a spe­cial treaty to keep bud­gets in bal­ance or sur­plus and cut debt and launched a per­ma­nent euro zone bailout fund, the 500 bil­lion euro ($660 bil­lion) Euro­pean Sta­bil­ity Mech­a­nism (ESM).

Euro­zone coun­tries also nego­ti­ated a new res­cue pack­ages for Greece, includ­ing a debt restruc­tur­ing, and agreed on a loan to recap­i­talise Span­ish banks. They decided the euro­zone will have a bank­ing union with a sin­gle super­vi­sor and, even­tu­ally, a joint bank res­o­lu­tion mech­a­nism and deposit guar­an­tee scheme.

The move that finally con­vinced investors was the Euro­pean Cen­tral Bank’s promise to buy unlim­ited amounts of bonds of a gov­ern­ment that asks for ESM help and agrees to reforms.

But lower deficits were still cen­tral to emerg­ing from the three-year pub­lic debt cri­sis, Rehn said, even though their is increas­ing debate about the impact of aus­ter­ity on growth.

The Inter­na­tional Mon­e­tary Fund said late last year that the dam­age from aggres­sive aus­ter­ity may be up to three times more than pre­vi­ously thought, after ear­lier pre­scrib­ing sharp deficit cuts to the euro­zone. The IMF has since shifted its advice, now argu­ing against forc­ing heav­ily indebted coun­tries such as Greece to reduce their deficits too quickly.

Rehn said the IMF’s Octo­ber study, which was updated this month, was not applic­a­ble to every­one and did not take into account that investors expect gov­ern­ments to con­trol their debt.

“You have to take into account the con­fi­dence effect,” Rehn said, adding that the impact of aus­ter­ity dif­fered across coun­tries depend­ing on whether they still had access to markets.

No word on Spain

The dif­fer­ence in opin­ion may mark a split within the “troika” of inter­na­tional lenders — the Com­mis­sion, the IMF and the Euro­pean Cen­tral Bank — over how to deal with frag­ile Euro­pean economies try­ing to pull out of reces­sion in 2013.

Against a back­drop of record unem­ploy­ment, many econ­o­mists believe spend­ing cuts in almost all euro zone coun­tries drove the bloc into its sec­ond reces­sion since 2009 last year.

But ECB chief Mario Draghi has also rejected any idea of eas­ing up on efforts to reduce sov­er­eign debt.

“So much progress accom­pa­nied by so big sac­ri­fices have already taken place that to revert to a sit­u­a­tion that has been found to be unten­able would not be right,” he told the ECB’s monthly news con­fer­ence on Thursday.

...

Yes, it just wouldn’t be right to reverse course on the aus­ter­ity dri­ves given all the sac­ri­fices that have been made...because sac­ri­fi­cial death-spirals are the height of virtue. Oh Con­fi­dence Fairies, may the wis­dom of your teach­ings spread far and wide.

Ah, the joys of cur­rency union policy-making: So it looks like there’s a num­ber of lead­ers in the finan­cial com­mu­nity that main­tain that the eurozone’s gen­eral “aus­ter­ity” approach is work­ing, as evi­denced by the calm­ing of the euro­zone sov­er­eign bond mar­kets (LOL!), but there’s still a pesky prob­lem of record unem­ploy­ment and per­sis­tent intra-eurozone trade imbal­ances. Finan­cial ana­lysts in the arti­cle below appears to have a num­ber of pro­posed changes, like dra­mat­i­cally cut­ting wages and slash­ing state spend­ing instead of mass lay­offs and slash­ing state spend­ing. Yep, those are the pro­posed changes for “rebal­anc­ing” the euro­zone:

Analy­sis: No respite for euro zone in long rebal­anc­ing slog

By Alan Wheat­ley, Global Eco­nom­ics Correspondent

LONDON | Tue Jan 22, 2013 3:12am EST

(Reuters) — The euro zone cri­sis is enter­ing a new, treach­er­ous phase for gov­ern­ments, which can only cross their fin­gers that slow-burn reforms will pay off before vot­ers get fed up with aus­ter­ity and high unem­ploy­ment.

On the face of it, 2013 should be a much less trau­matic year than 2012 for the 17-nation single-currency area.

Finan­cial con­di­tions have improved enor­mously since the Euro­pean Cen­tral Bank promised to do what­ever it takes to pre­serve the euro. Yields on the bonds of highly indebted periph­eral coun­tries have fallen sharply, bank fund­ing strains have eased and stock mar­kets have ral­lied.
y
Coun­tries on the south­ern rim of the euro zone have made big strides in reduc­ing their bud­get and trade deficits. They are no longer liv­ing way beyond their means. They have also intro­duced polit­i­cally touchy struc­tural reforms, notably to make their labor mar­kets more flexible.

But demand is likely to remain weak, while unem­ploy­ment, already at a record 11.8 per­cent, is fore­cast to rise fur­ther before it comes down. Recov­ery will be slow.

“They’ve taken the med­i­cine, but they’re not going to jump out of bed straight away,” said Sebas­t­ian Barnes at the Organ­i­sa­tion for Eco­nomic Coop­er­a­tion and Devel­op­ment in Paris.

“The prob­lem is bridg­ing the gap over the next two or three years when you’re putting in place the right poli­cies but they’re not quite bear­ing fruit. So it’s a ques­tion of man­ag­ing pub­lic expec­ta­tions,” Barnes, adviser to the rich-country forum’s chief econ­o­mist, added.

...

A nag­ging worry is that the euro zone is mak­ing up for its eco­nomic mis­takes through what Barnes calls “bad rebalancing”.

So, while ris­ing exports have played a role, the improve­ment in the periphery’s cur­rent account has been achieved mainly by slash­ing imports.

And the reduc­tion in rel­a­tive wage costs needed to bring about ‘inter­nal deval­u­a­tion’ — the only deval­u­a­tion avail­able in the absence of exchange rate flex­i­bil­ity — has so far been engi­neered dis­pro­por­tion­ately through a rise in unem­ploy­ment rather than wage mod­er­a­tion.

Ire­land is a notable excep­tion — as is Britain out­side the euro zone — and Barnes said there were encour­ag­ing signs else­where, for exam­ple in Spain.

Italy, how­ever, has barely touched its wage bar­gain­ing sys­tem. “The prob­lem there is that wages have run ahead of pro­duc­tiv­ity,” he said.

LET’S GET STRUCTURAL

Gilles Moec, an econ­o­mist with Deutsche Bank in Lon­don, also frets about Italy. Italy has its gov­ern­ment deficit under con­trol, but Moec sees signs of a grow­ing ‘employ­ment over­hang’, linked to what he says is extremely slow finan­cial rebal­anc­ing by the pri­vate sec­tor since the onset of the crisis.

This is reflected in a rise in employee com­pen­sa­tion in Italy as a per­cent­age of cor­po­rate value-added to 57.7 per­cent from 52.5 per­cent in 2007.

By con­trast, in Spain, where unem­ploy­ment of 25 per­cent is more than twice as high as Italy’s, the wage share dropped over the same period to 55.9 per­cent from 64.7 percent.

Rebal­anc­ing, in short, is far from com­plete. That is true for cred­i­tor coun­tries, too. Germany’s cur­rent account sur­plus is stuck at a stub­bornly high 6 per­cent of GDP, reflect­ing weak invest­ment and con­sump­tion.

Gold­man Sachs has attempted to mea­sure the progress being made in iron­ing out the imbal­ances by updat­ing its esti­mates of the real exchange rate changes needed to bring coun­tries’ net debt posi­tions — the result of accu­mu­lated annual cur­rent account deficits and sur­pluses — back into broad equilibrium.

In keep­ing with improve­ments in their cur­rent accounts, Greece, Por­tu­gal and Spain now require an inflation-adjusted depre­ci­a­tion that is about eight to 10 per­cent­age points lower than two years ago, Gold­man reckons.

Still, the remain­ing adjust­ment is huge — about 25–30 per­cent in the case of Spain and around 15–25 per­cent not only in Greece and Por­tu­gal but also in France, where employ­ers and unions this month agreed on a pack­age of labor reforms to restore competitiveness.

Ger­many, inci­den­tally, requires a real appre­ci­a­tion of 15–25 percent.

Instead of higher unem­ploy­ment and lower wages, struc­tural reforms offer a less painful path to rebal­anc­ing, Gold­man said.

Switch­ing resources to exports from domes­tic sec­tors such as con­struc­tion in Spain and pub­lic ser­vices in France would reduce the need for fur­ther real exchange rate depreciation.

“But adopt­ing such reforms is not pain­less: the poten­tial loss of polit­i­cal cap­i­tal from vested groups stand­ing to lose exist­ing priv­i­leges can pre­vent politi­cians from imple­ment­ing the nec­es­sary reforms. This remains true across most of the periph­ery, in France and Ger­many,” wrote Gold­man econ­o­mist Lasse Hol­boell W. Nielsen.

Barnes with the OECD said all coun­tries could do more, but the lack of reform in big­ger economies, includ­ing France and Ger­many, was a par­tic­u­lar concern.

The OECD’s research sug­gests that, con­trary to received wis­dom, struc­tural reforms can yield pos­i­tive results within a year or two, notably by cat­alyz­ing invest­ment and jobs. In turn, that can have an impact on pub­lic per­cep­tions.

“I don’t think in any of these coun­tries the reforms are suf­fi­cient for what they should be achiev­ing in the long run,” Barnes said. “But just get­ting reform on the agenda and get­ting peo­ple to rec­og­nize that the sys­tem needs to change, and is going to change, is very important.”

Yes, accord­ing to the OECD, con­trary to “received wis­dom” (which one can “receive” by observ­ing recent eco­nomic his­tory), “struc­tural reforms” (i.e. mass wage cuts and cut­ting pub­lic spend­ing) really can work in a year or two by cat­alyz­ing invest­ment and jobs. If it hasn’t hap­pened over the past year of two, it’s because there hasn’t been enough “struc­tural reform”. It’s a theme.

Anthana­sios Orh­panides, the for­mer head of the Cen­tral bank of Cyprus and for­mer adviser to the US Fed­eral reserve, appears to be lament­ing the ECB’s com­mit­ment to pur­chas­ing sov­er­eign bonds — which was only agreed upon by the ECB when it appeared that Spain was on the verge of austerity-induced finan­cial implo­sion — because these emer­gency bond pur­chases only delayed desired “reforms”. He also thinks it’s crazy that the UK might not be enthu­si­as­tic about fur­ther EU inte­gra­tion. Inter­est­ing:

Bloomberg
Orphanides Says ECB Bond-Buy Plan May Delay Gov­ern­ment Reforms
By Ste­fan Riecher — Jan 17, 2013 10:49 AM CT

For­mer Euro­pean Cen­tral Bank Gov­ern­ing Coun­cil mem­ber Athana­sios Orphanides said the ECB’s bond-purchase plan may prompt gov­ern­ments to delay needed reforms.

The pro­gram, dubbed Out­right Mon­e­tary Trans­ac­tions, has “given gov­ern­ments yet another oppor­tu­nity to post­pone actions,” Orphanides said today at the Bloomberg Global Mar­kets Sum­mit in New York. “Inad­ver­tently, the OMT may have delayed the progress that I would have hoped to see at the end of last year.”

ECB Pres­i­dent Mario Draghi has pledged to buy unlim­ited amounts of sov­er­eign bonds if needed to shore up con­fi­dence in the euro as long as gov­ern­ments sign up to eco­nomic reforms. The announce­ment of the plan alone has low­ered bor­row­ing costs in coun­tries like Spain and Italy, reduc­ing pres­sure on them to agree to the terms of ECB bond purchases.

...

U.K. Exit ‘Suicidal’

Orphanides, who sat on the ECB coun­cil as the gov­er­nor of the cen­tral bank of Cyprus until last May, said Euro­pean gov­ern­ments “need to real­ize that the gov­er­nance of the euro area needs to be strengthened.”

“Strenghen­ing gov­er­nance is some­thing we will hope­fully see more of, and that’s the rea­son why we can be opti­mistic,” he said.

Asked about the pos­si­bil­ity of the U.K. exit­ing the Euro­pean Union, Orphanides, now a senior lec­turer at the MIT Sloan School of Man­age­ment in Cam­bridge, Mass­a­chu­setts, said such an event would be cat­a­strophic for Lon­don and Britain.

“It would be unthink­able that over the long haul Lon­don could remain the finan­cial cen­ter of the euro area, and this is a huge risk to the U.K.,” he said. “The U.K. has ben­e­fited tremen­dously from the arrange­ment. Frankly, I think it would be sui­ci­dal for the British econ­omy over the long run if they exited.”

So, appar­ently, if Spain was allowed to implode last Sep­tem­ber, Spain and the UK could have avoided this:

Bloomberg
Spain’s Lost Gen­er­a­tion Spends Salad Days Toil­ing in U.K.
By Andrea Ger­lin & Alex Morales — Jan 23, 2013 6:46 AM CT

Car­los Her­nan­dez Son­seca stud­ied six years for a bachelor’s degree and couldn’t find a job near his home out­side Madrid when he grad­u­ated in 2011. Last year, he took an increas­ingly well-worn path to the U.K.

The 27-year-old jour­nal­ist now washes and chops veg­eta­bles eight hours a day at the Vital Ingre­di­ent salad bar in London’s finan­cial dis­trict, mak­ing 260 pounds ($418) before taxes in a 40-hour week. Thir­teen other Spaniards are among a work­force of 17, said man­ager Fran­cisco “Chico” Baumle, a Brazilian.

U.K. fast-food jobs and other low-wage roles have been dom­i­nated by Poles and oth­ers who arrived after the Euro­pean Union expanded east­ward in 2004. Now they’re joined by young Spaniards who can’t find work at home, where unem­ploy­ment hit 25 per­cent last year. In the finan­cial year to April, 30,370 Spaniards reg­is­tered to work in the U.K., up 25 per­cent from the pre­vi­ous year, and more than dou­ble the 2009-10 lev­els, accord­ing to data from the Depart­ment for Work and Pensions.

“We are a lost gen­er­a­tion, for sure,” Her­nan­dez Son­seca said. “Spain has noth­ing to offer us, so we go abroad and we work as salad mak­ers and kitchen porters. They are los­ing money and they are los­ing skilled people.”

The newest work­ers have it tough­est in Spain’s labor mar­ket, where the job­less rate among adults under 25 reached 52 per­cent in the third quar­ter of 2012, accord­ing to the most recent data from Spain’s National Insti­tute of Sta­tis­tics.
McDonald’s Job

The unem­ploy­ment rate in the fourth quar­ter, due to be released tomor­row by the insti­tute, prob­a­bly rose to 26 per­cent, accord­ing to the median of 10 esti­mates in a Bloomberg sur­vey. In the U.K., where the unem­ploy­ment rate is 7.7 per­cent, job­less claims unex­pect­edly fell in Decem­ber, the Office for National Sta­tis­tics said today.

Her­nan­dez Son­seca is one of three mem­bers of his uni­ver­sity class now work­ing at the same salad bar. His col­league Pablo Med­ina Mar­tin came to Lon­don in Jan­u­ary 2012 and ran down his sav­ings dur­ing a month-long job hunt. He cleared tables and unloaded deliv­er­ies at a McDonald’s Corp. (MCD) restau­rant in east Lon­don before mov­ing to the salad bar in May.

“When I went to uni­ver­sity, I never thought I’d end up work­ing in a McDonald’s,” said Med­ina Mar­tin. “In Spain, the staff in McDonald’s tends to be from South Amer­ica, Ecuador, Colom­bia, the immi­grants. Here in Lon­don, we’ve real­ized we’re the ones who are the immigrants.”

...

Here’s one of those arti­cles that should raise ques­tions over whether or not increas­ing eco­nomic “com­pet­i­tive­ness” is really all that great a goal:

Deautsche-Welle
Work­place stress is cost­ing Ger­many time, money, health
Date 29.01.2013

Work­place stress is impact­ing on lives and bal­ance sheets alike, and more strongly than ever, a new study has found. Ger­man Labor Min­is­ter Ursula von der Leyen has urged employ­ers and trade unions to seek solutions.

...

The “Stress Report Ger­many 2012″ study, pub­lished on Tues­day, indi­cates that 43 per­cent of work­ers believe that their jobs have become more stress­ful in the past two years.

Half of the roughly 17,600 peo­ple sur­veyed said they faced severe time pres­sure, and of those who took time off owing to psy­cho­log­i­cal ill­ness, 70 per­cent said the cause was stress.

Fresh impe­tus for failed talks?

Talks between employ­ers and unions seek­ing a com­mon “state­ment on psy­cho­log­i­cal well-being in the work­place” recently fell apart, with trade unions blam­ing the employers.

Von der Leyen said such leg­is­la­tion remained a pos­si­bil­ity, although she added that it would only be mean­ing­ful if labor rep­re­sen­ta­tives — not the gov­ern­ment — forged it. Some mea­sures to pro­tect work­ers’ psy­cho­log­i­cal well-being are already enshrined in Ger­man and EU law.

“There is a need to act in our busi­nesses,” the Chris­t­ian Demo­c­rat cab­i­net min­is­ter concluded.

Almost half of the full-time staff sur­veyed in the study by the Fed­eral Insti­tute for Occu­pa­tional Safety and Health (BAuA) said they worked more than a 40-hour week; one in six said they were in the office for more than 48 hours. More than 60 per­cent said they worked Saturdays.

The institute’s pres­i­dent, Isabel Rothe, said her orga­ni­za­tion had noted a steep rise in work­place stress up until 2006, with lev­els remain­ing com­par­a­tively con­sis­tent since then.

...

The ques­tion of “why we struc­ture the econ­omy the way we do?” has pretty much always been a poignant ques­tion for soci­eties across the globe. But when were liv­ing in a glob­al­ized econ­omy that’s fac­ing surg­ing youth unem­ploy­ment cou­pled with an appar­ent inabil­ity for soci­eties to deal with aging pop­u­la­tions and lim­ited vital nat­ural resources, it’s impor­tant to keep in mind that some goals are bet­ter than oth­ers.

One of the ideas behind the expansionary-austerity the­o­ries is that once a “rebalancing”(wage cuts) has taken place within the indebted coun­try the increased “com­pet­i­tive­ness” will result in a rebound in exports and eco­nomic reju­ve­na­tion. And sure enough, it looks like Greece’s aus­ter­ity regime has increased at least one type of export:

Fears in Ger­many as Golden Dawn moves in from Greece

Greek neo-Nazi party believed to be in Nurem­berg with aim of recruit­ing young Greeks flock­ing to Ger­many in search of work

Kate Con­nolly in Berlin and Helena Smith in Athens
The Guardian, Tues­day 5 Feb­ru­ary 2013 13.26 EST

Ger­man and Greek rightwing extrem­ists have been forg­ing close con­tacts in Ger­many in an attempt to strengthen their power base in Europe, accord­ing to Ger­man officials.

Mem­bers of the Greek neo-Nazi party Golden Dawn are believed to have set up a cell in the south­ern Ger­man city of Nurem­berg with the aim of recruit­ing young Greeks who have flocked to the coun­try in search of work.

Greek com­mu­nity lead­ers in Ger­many have con­demned the arrival of the party, also known as Chrysi Avgi, and called on author­i­ties to clamp down on a group that they said had shown its readi­ness to use vio­lence in Greece and could attempt to do the same in Germany.

Golden Dawn, which has close to 20 seats in the Greek par­lia­ment, has described the move on its web­site as the “answer of expat Greeks to the dirty hip­pies and the regime of demo­c­ra­tic dic­ta­tor­ship in our homeland”.

In a state­ment, the Bavar­ian office for the pro­tec­tion of the con­sti­tu­tion said: “We are keep­ing an eye on developments.”

It said Golden Dawn had “an inter­na­tional net­work of con­tacts, includ­ing con­tacts with neo-Nazis in Bavaria. These con­tacts are cul­ti­vated via mutual vis­its as well as at meet­ings at rightwing extrem­ist events in Europe.”

It con­firmed that mem­bers of Golden Dawn and far-right Ger­man groups had organ­ised rec­i­p­ro­cal vis­its to each other’s coun­tries as well as meet­ing at rightwing extrem­ist meet­ings out­side Ger­many and Greece.

...

An esti­mated 380,000 Greeks live in Ger­many, mainly in the indus­trial Ruhr val­ley, though the actual fig­ure, as – many do not reg­is­ter with the author­i­ties – is believed to be nearer 900,000. Roughly-speaking in mod­ern times they have come in three waves – after the sec­ond world war and then dur­ing the Greek dic­ta­tor­ship, when many Greek com­mu­nists were given refuge, par­tic­u­larly in East Ger­many. The third wave is occur­ring now as many, par­tic­u­larly young Greeks, come to Ger­many look­ing for work and to escape unem­ploy­ment at home.German neo-Nazi groups, such as the Bavarian-based Freies Netz Süd, have been fol­low­ing the polit­i­cal suc­cesses of Chrysi Avgi for some time, mak­ing open ref­er­ence to the Greek party on their websites.

The anti-Nazi organ­i­sa­tion Nurem­berg Union Nazi Stop said it would be mon­i­tor­ing Golden Dawn’s activ­i­ties in Germany.

Over the past months Golden Dawn, which is widely con­sid­ered to be racist and anti­se­mitic, has been held respon­si­ble for numer­ous attacks on for­eign­ers in Greece. The party, whose sym­bol resem­bles the swastika, won 18 par­lia­men­tary seats in last year’s elec­tion. Its pop­u­lar­ity cur­rently stands at around 12%.

Clearly, the only fea­si­ble way for the US to pre­vent a com­plete implo­sion of the US econ­omy is to imple­ment aggres­sive aus­ter­ity mea­sures now. Oth­er­wise the deficit will spi­ral out of con­trol and no one will want to buy US debt:

For­eign hold­ings of US debt increased to record $5.56 tril­lion in December

By Asso­ci­ated Press, Updated: Fri­day, Feb­ru­ary 15, 9:49 AM

WASHINGTON — For­eign demand for U.S. Trea­sury secu­ri­ties rose to a record level in Decem­ber, evi­dence that over­seas investors remained con­fi­dent in U.S. debt despite on-going bud­get bat­tles in Washington.

The Trea­sury Depart­ment said Fri­day that for­eign hold­ings of U.S. Trea­surys rose 0.3 per­cent in Decem­ber from Novem­ber to $5.56 tril­lion. It was the 12th con­sec­u­tive monthly gain.

China, the top for­eign holder, increased its hold­ings 1.7 per­cent to $1.2 tril­lion. Japan, the sec­ond largest holder, boosted its invest­ment 0.2 per­cent to $1.12 trillion.

Demand kept ris­ing in Decem­ber even as Con­gress approached a dead­line to raise the government’s $16.4 tril­lion bor­row­ing limit. In Jan­u­ary, Con­gress approved a mea­sure to tem­porar­ily sus­pend the bor­row­ing limit until May 19. That has allowed the gov­ern­ment to take on more debt while the debate continues.

Why can’t policy-makers just do the right thing, make the cuts, and set the econ­omy on a path to pros­per­ity? It’s for the chil­dren:

Austerity’s chil­dren becom­ing Europe’s ‘lost gen­er­a­tion,’ rais­ing fears of new cri­sis
Claire Dav­en­port, Reuters | Feb 14, 2013 12:10 PM ET

BRUSSELS – Chil­dren across Europe are being dri­ven into poverty by harsh gov­ern­ment aus­ter­ity and youth unem­ploy­ment is soar­ing, threat­en­ing to cre­ate “lost gen­er­a­tions” that could fire up a new con­ti­nen­tal crisis.

Global char­ity Car­i­tas said on Thurs­day that around three out of every 10 chil­dren in Greece, Ire­land, Por­tu­gal, Italy and Spain are in or have been pushed to the brink of poverty.

Greece said its youth unem­ploy­ment had now exceeded 60%. Spain’s is above 50% and Por­tu­gal has just topped 40%.

Think tank Bruegel said the prob­lem extended well beyond the debt-laden periph­eral euro­zone economies and could come back to reverse Europe’s slow recov­ery from finan­cial crisis.

In a report, Car­i­tas said euro­zone coun­tries that have received inter­na­tional loans — plus Italy, which hasn’t — are cre­at­ing a huge class of poorly-educated and poorly-fed young peo­ple with low morale and few job prospects.

“This could be a recipe not just for one lost gen­er­a­tion in Europe but for sev­eral lost gen­er­a­tions,” Car­i­tas said, cit­ing the Euro­pean Union’s own statistics.

While these coun­tries’ future work­ers may suf­fer a loss of morale, qual­i­fi­ca­tions and prospects, those that strug­gle through are likely to take their tal­ents elsewhere.

Those with qual­i­fi­ca­tions are already leav­ing in droves to seek work else­where, par­tic­u­larly in Ger­many where the num­ber of Span­ish and Greek job­seek­ers almost dou­bled dur­ing the first half of 2012.

Bruegel econ­o­mist Zsolt Dar­vas said the relent­less rise in youth unem­ploy­ment not only destroyed morale at an impor­tant age of devel­op­ment but also threat­ened to reignite an eco­nomic cri­sis that appeared to be easing.

“This is not just a prob­lem for these (periph­eral) coun­tries. This is a Euro­pean prob­lem,” he said. Thir­teen of the Euro­pean Union’s 27 mem­ber states have youth unem­ploy­ment above 25%.

AUSTERE GOVERNMENTS

Since 2010, Greece, Ire­land, and Por­tu­gal have received bil­lions of euros in loans from the EU and the Inter­na­tional Mon­e­tary Fund in return for spend­ing cut­backs and tax rises. Spain has had its banks bailed out.

...

In 2010, 37.6% of chil­dren were at risk of poverty or exclu­sion in Ire­land and 28.9% in Italy. Fig­ures for 2011 are not available.

Chil­dren are defined as near­ing poverty and exclu­sion if they live in fam­i­lies with 60% or less the median income or have par­ents with lit­tle or no employ­ment or lack basic essen­tials such as protein-rich foods, heat­ing and clothes.

Car­i­tas said gov­ern­ments must ask them­selves what these trends will mean for chil­dren in the long run.

Stud­ies show chil­dren from poor house­holds are more likely to under­per­form at school and to strug­gle to find or keep a job.

“They are look­ing at a future where the prospect of unem­ploy­ment is stretch­ing out ahead of them,” de Burca said.

Two news sto­ries came out yes­ter­day that dove­tail per­fectly in an exam­i­na­tion of the cur­rent stench (state) of Amer­i­can cap­i­tal­ism. Here’s the first, from “The Daily Mail.UK”:

http://www.dailymail.co.uk/news/article-2306980/Why-better-grow-Slovenia-Greece-U-S-Lack-education-healthcare-costs-homicide-rates-America-26th-29-nations-UN-survey.html

“Why it’s bet­ter to grow up in Slove­nia and Greece than the U.S: Child­hood obe­sity, poor edu­ca­tion and homi­cide rates put Amer­ica 26th out of 29 nations in sur­vey about best places to raise a child”

“Lack of edu­ca­tion, cost of health­care, child­hood obe­sity and teenage preg­nan­cies put the life chances of Amer­i­can chil­dren at the bot­tom of a table of over­all well being – far behind those from poorer coun­tries, a damn­ing report has found.
UNICEF ranked the U.S. at the bot­tom of a league table of the best places to raise a child – below the likes of Slove­nia, Greece, Hun­gary and Slo­va­kia.
Only Lithua­nia, Latvia and Roma­nia lagged behind.
Despite being the sev­enth rich­est coun­try in the world, the U.S. had some of the worst rates for teenage preg­nan­cies, homi­cide and child­hood obe­sity.
The overview of child well-being was con­structed out of five dif­fer­ent dimen­sions – mate­r­ial well-being, edu­ca­tion, health and safety, behav­iors and risks and hous­ing and envi­ron­ment.
Fac­tors such as poverty, infant mor­tal­ity and homi­cide rates were taken into con­sid­er­a­tion.
For behav­iors and risks, things like teenage preg­nan­cies, smok­ing cannabis, bul­ly­ing, obe­sity and exer­cise taken were fac­tored in.
The U.S. is one of the only coun­tries with infant mor­tal­ity rates higher than six per 1,000 births, along with Latvia, Roma­nia and Slo­va­kia, and has one of the low­est birth weight rates of all the coun­tries sur­veyed.
It also has one of the low­est rates of young peo­ple enrolled in edu­ca­tion and preschool.
Only Greece and Roma­nia fared worse in over­all edu­ca­tional well-being.
Amer­ica has – by far – the high­est rate of chil­dren who are over­weight by BMI with almost 30 per cent, though it also has one of the high­est rates of chil­dren aged 11 – 15 who exer­cise at least one hour a day, com­ing sec­ond only behind Ire­land.
The U.S. has the high­est rate of teenage preg­nan­cies but one of the low­est lev­els of under­age drink­ing.
It also ranks at the bot­tom of the league in homi­cide rates with five per 100,000.
The ‘low fam­ily afflu­ence’ rate, the infant mor­tal­ity rate, and the per­cent­age of young peo­ple who smoke cig­a­rettes, for exam­ple, have fallen in every sin­gle coun­try for which data was made avail­able.
Over­all, the Nether­lands was ranked first, fol­lowed by Nor­way, Ice­land, Fin­land and Swe­den.
(Mulit­ple charts with infor­ma­tion at link)
—————————————————–

So why have things got­ten so bad for the gen­eral pop­u­la­tion in Amer­ica com­pared to small Euro­pean coun­tries that have been bat­tered by war and aus­ter­ity?
“Rus­sia Today” (RT) –Ok, con­sider the source… Has a valid argu­ment that the U.S. has been taken over by cor­po­rate fascism:

http://rt.com/op-edge/us-economy-fascism-crisis-democracy-696/

Is it cor­po­rate fas­cism yet?

“The finan­cial cri­sis that washed across the globe in 2008 is just the lat­est eco­nomic dis­as­ter to hit the Amer­i­can peo­ple. The fall of too-big-to-fail banks and com­pa­nies marked the lat­est chap­ter of a tragedy that has been unfold­ing for years.

Franklin D. Roo­sevelt once warned that democ­racy will never be safe if the peo­ple tol­er­ate the growth of pri­vate power to a point where it becomes stronger than their demo­c­ra­tic state itself. If such a sce­nario arose, Roo­sevelt said, that would be the very def­i­n­i­tion of fas­cism.
Has Amer­ica, the self-proclaimed land of the free, reached such a point?

With the rise of the law­less transna­tional cor­po­ra­tions, an increas­ing num­ber of Amer­i­cans are becom­ing mere spec­ta­tors to this winner-take-all econ­omy. At the same time, work­ers are sim­ply too afraid of risk­ing their posi­tions by demand­ing demo­c­ra­tic rep­re­sen­ta­tion in their myr­iad work­places. Cor­po­ra­tions play on the fear fac­tor while enforc­ing the most egre­gious labor practices.

Com­bine this with the vast polit­i­cal pow­ers that cor­po­ra­tions have acquired and you have a recipe for a national disaster.

As Fran­cis Fukuyama pointed out, “An Amer­i­can chief exec­u­tive exer­cises author­i­tar­ian pow­ers of which a politi­cian could only dream,” and is held account­able in his actions only to a board of direc­tors, which enables him to “hire, fire, make merg­ers or divest divi­sions at will.”
Indeed, the cap­tains of big busi­ness are able to act with total impunity, and this has cre­ated a ver­i­ta­ble reign of fear through­out every sec­tor of the economy.

For the Amer­i­can peo­ple, out-of-control cor­po­rate power – cor­po­rate fas­cism, if you will – has eroded their stan­dard of liv­ing, to say noth­ing about the stan­dard of democracy.

No mat­ter how the spin doc­tors twist US labor data over the past forty years, it is nearly impos­si­ble to find a sil­ver lin­ing. As the Finan­cial Times summed up the grim real­ity: “The annual incomes of the bot­tom 90 per­cent of US fam­i­lies have been essen­tially flat since 1973—having risen only by 10 per­cent in real terms over the past 37 years”—despite the rise in two-income homes. Over the same period, how­ever, the incomes of the top 1 per­cent have smashed through the roof.
Con­sider the fan­tas­tic growth of bil­lion­aires in the United States over a very short time. When Forbes mag­a­zine launched its rank­ing of the nation’s ultra wealthy in 1982, the “price of admis­sion” into this pres­ti­gious club was just $75 mil­lion of net worth. Today, as Forbes reported, even after adjust­ing for infla­tion, “this year’s entry fee ($1.1 bil­lion) is roughly six times what it was 30 years ago.

Here is a look at the res­i­dents of the Forbes 400 pent­house, oth­er­wise known as the 1 per­cent: “The com­bined net worth of the 2012 class of the 400 rich­est Amer­i­cans is $1.7 tril­lion, up from $1.5 tril­lion a year ago. The aver­age net worth of a Forbes 400 mem­ber is a stag­ger­ing $4.2 bil­lion, up from $3.8 bil­lion, and the high­est ever, as two-thirds of the indi­vid­u­als added to their for­tunes in the past year.”

Now com­pare those fig­ures to 1982, when there were just 13 bil­lion­aires while the total worth of the 400 club was just $93 bil­lion. Despite what the super rich wish to believe, this mas­sive hoard­ing of wealth is work­ing against the Amer­i­can people.

For those who have for­got­ten what the eco­nomic cli­mate inside of the United States was like before the 2008 eco­nomic tsunami made land­fall, con­sider the fol­low­ing. The Econ­o­mist, quot­ing Julia Isaacs of the Brook­ings Insti­tute, reported that “between 1974 and 2004 median wages for men in their 30s, adjusted for infla­tion, fell by 12% from $40,000 to $35,000.”

The Wall Street Jour­nal, call­ing this middle-class blood­let­ting “the lost decade,” reported: “The inflation-adjusted income of the median household—smack in the mid­dle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when median income rose 1.9% despite high unem­ploy­ment and infla­tion. Between 2007 and 2009, incomes fell 4.2%.”

The arti­cle pro­vided a can­did com­ment by Nicholas Eber­stadt, a polit­i­cal econ­o­mist at the right lean­ing Amer­i­can Enter­prise Insti­tute: “It’s going to be a long, hard slog back to what most Amer­i­cans think of as nor­malcy or pros­per­ous times.” That dire prog­no­sis may even­tu­ally prove to be overly opti­mistic since many econ­o­mists believe the best days of the Amer­i­can econ­omy are gone forever.

The hard­est thing to accept about this fan­tas­tic rever­sal of for­tune for so many Amer­i­can peo­ple is that much of the present pain and suf­fer­ing was largely avoid­able. It would have required self-restraint, polit­i­cal will, and very lit­tle sac­ri­fice, but the bleed­ing of the Amer­i­can mid­dle class was noth­ing less than a delib­er­ate, pre­med­i­tated crime.

As the Finan­cial Times revealed, “the share of the US income that goes to work­ers as wages rather than to investors as profits…has fallen to its low­est level since records began after the Sec­ond World War.” The world’s most rep­utable busi­ness news­pa­per was forced to admit that “some­thing strange and unprece­dented is going on” inside the US econ­omy.
Strange, indeed. Accord­ing to the above­men­tioned report, the present eco­nomic cri­sis is a wildly dif­fer­ent ani­mal from past reces­sions and depres­sions. In past crises, “the labour share tends to rise dur­ing reces­sions as com­pa­nies hold on to work­ers and sac­ri­fice prof­its, then falls back in a recov­ery,” accord­ing to FT. “But dur­ing the 2008 reces­sion the labour share did the oppo­site: it fell, and when the recov­ery began it kept falling.”

Here comes the bloody kicker: “If wages were at their post­war aver­age share of 63 per­cent, work­ers would earn an extra $740bn this year, about $5,000 per worker,” the FT arti­cle reveals. Labor’s slice of the income pie has decreased to 58 per­cent, a his­toric low that still has not hit bot­tom. This unprece­dented dis­par­ity in wage dis­tri­b­u­tion explains why the US econ­omy is furi­ously spin­ning its wheels, while only the cor­po­ra­tions seem to be advancing.

Mean­while, labor is always one pre­car­i­ous step away from becom­ing road kill. “The decline in the US labor share, along with a shift of labor income towards higher earn­ers, may be an impor­tant part of why the US eco­nomic recov­ery is so slug­gish,” the arti­cle con­cludes. “Instead of hoard­ing labor and cut­ting prices to grab mar­ket share, com­pa­nies are sack­ing work­ers, hold­ing prices and choos­ing to buy back their own equity rather than make new investments.”

Clearly, the Amer­i­can cor­po­rate elite – now fully blessed with the polit­i­cal rep­re­sen­ta­tion orig­i­nally designed for We the Peo­ple – is indulging itself to an all-you-can-eat smor­gas­bord at the salary trough, and with a void of demo­c­ra­tic pro­ce­dure inside the work­place, nobody is forc­ing them away from the table.

What the Amer­i­can worker des­per­ately needs today is a sep­a­ra­tion of busi­ness from pol­i­tics, sim­i­lar to the way the world of pol­i­tics was sep­a­rated from the world of reli­gion. He also needs demo­c­ra­tic rep­re­sen­ta­tion inside of the workplace.

“The mis­sion of demo­c­ra­tic state­craft…,” wrote Arthur M. Schlesinger Jr. “is to give soci­ety a chance of con­trol­ling the ener­gies let loose by sci­ence and tech­nol­ogy. Demo­c­ra­tic lead­er­ship is the art of fos­ter­ing and man­ag­ing inno­va­tion in the ser­vice of a free community.”

A per­son need not be a Marx­ist to under­stand a very sim­ple uni­ver­sal truth: With­out vibrant rep­re­sen­ta­tion both in the work­place and at home, the indi­vid­u­als at the top of the cor­po­rate pyra­mid will exploit the peo­ple in the eter­nal quest for greater profit. At that point, with the cor­po­rate over­lords in bed with our polit­i­cal rep­re­sen­ta­tives, and demo­c­ra­tic pro­ce­dure totally absent inside of the cor­po­rate fortress, fas­cist is the only way to define such a bru­tal system.

Excerpt from the new book by Robert Bridge, “Mid­night in the Amer­i­can Empire”

Aus­ter­ity: You’d sup­port it if you really cared about the kids:

The New York Times
More Chil­dren in Greece Are Going Hungry

By LIZ ALDERMAN
Pub­lished: April 17, 2013

ATHENS — As an ele­men­tary school prin­ci­pal, Leonidas Nikas is used to see­ing chil­dren play, laugh and dream about the future. But recently he has seen some­thing alto­gether dif­fer­ent, some­thing he thought was impos­si­ble in Greece: chil­dren pick­ing through school trash cans for food; needy young­sters ask­ing play­mates for left­overs; and an 11-year-old boy, Pan­telis Petrakis, bent over with hunger pains.

“He had eaten almost noth­ing at home,” Mr. Nikas said, sit­ting in his cramped school office near the port of Piraeus, a working-class sub­urb of Athens, as the sound of a jump rope skit­tered across the play­ground. He con­fronted Pantelis’s par­ents, who were ashamed and embar­rassed but admit­ted that they had not been able to find work for months. Their sav­ings were gone, and they were liv­ing on rations of pasta and ketchup.

“Not in my wildest dreams would I expect to see the sit­u­a­tion we are in,” Mr. Nikas said. “We have reached a point where chil­dren in Greece are com­ing to school hun­gry. Today, fam­i­lies have dif­fi­cul­ties not only of employ­ment, but of survival.”

The Greek econ­omy is in free fall, hav­ing shrunk by 20 per­cent in the past five years. The unem­ploy­ment rate is more than 27 per­cent, the high­est in Europe, and 6 of 10 job seek­ers say they have not worked in more than a year. Those dry sta­tis­tics are reshap­ing the lives of Greek fam­i­lies with chil­dren, more of whom are arriv­ing at schools hun­gry or under­fed, even mal­nour­ished, accord­ing to pri­vate groups and the gov­ern­ment itself.

Last year, an esti­mated 10 per­cent of Greek ele­men­tary and mid­dle school stu­dents suf­fered from what pub­lic health pro­fes­sion­als call “food inse­cu­rity,” mean­ing they faced hunger or the risk of it, said Dr. Athena Linos, a pro­fes­sor at the Uni­ver­sity of Athens Med­ical School who also heads a food assis­tance pro­gram at Pro­lep­sis, a non­govern­men­tal pub­lic health group that has stud­ied the sit­u­a­tion. “When it comes to food inse­cu­rity, Greece has now fallen to the level of some African coun­tries,” she said.

Unlike those in the United States, Greek schools do not offer sub­si­dized cafe­te­ria lunches. Stu­dents bring their own food or buy items from a can­teen. The cost has become insur­mount­able for some fam­i­lies with lit­tle or no income. Their trou­bles have been com­pounded by new aus­ter­ity mea­sures demanded by Greece’s cred­i­tors, includ­ing higher elec­tric­ity taxes and cuts in sub­si­dies for large fam­i­lies. As a result, par­ents with­out work are see­ing their sav­ings and ben­e­fits rapidly disappear.

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“Our dreams are crushed,” added Evan­gelia, whose par­ents are unem­ployed but who is not in the same dire sit­u­a­tion as her peers. She paused, then con­tin­ued in a low voice. “They say that when you drown, your life flashes before your eyes. My sense is that in Greece, we are drown­ing on dry land.”

Alexan­dra Perri, who works at the school, said that at least 60 of the 280 stu­dents suf­fered from mal­nu­tri­tion. Chil­dren who once boasted of sweets and meat now talk of eat­ing boiled mac­a­roni, lentils, rice or pota­toes. “The cheap­est stuff,” Ms. Perri said.

This year the num­ber of mal­nu­tri­tion cases jumped. “A year ago, it wasn’t like this,” Ms. Perri, said, fight­ing back tears. “What’s fright­en­ing is the speed at which it is happening.”

The gov­ern­ment, which ini­tially dis­missed the reports as exag­ger­a­tions, recently acknowl­edged that it needed to tackle the issue of mal­nu­tri­tion in schools. But with pri­or­i­ties placed on repay­ing bailout funds, there is lit­tle money in Greek cof­fers to cope.

Mr. Nikas, the prin­ci­pal, said he knew that the Greek gov­ern­ment was labor­ing to fix the econ­omy. Now that talk of Greece’s exit­ing the euro zone has dis­ap­peared, things look bet­ter to the out­side world. “But tell that to the fam­ily of Pan­telis,” he said. “They don’t feel the improve­ment in their lives.”

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Mr. Nikas, the prin­ci­pal at 11-year-old Pantelis’s school, has taken mat­ters into his own hands and is orga­niz­ing food dri­ves at the school. He is angry at what he sees as broader neglect of Greece’s trou­bles by Europe.

“I’m not say­ing we should just wait for oth­ers to help us,” he said. “But unless the Euro­pean Union acts like this school, where fam­i­lies help other fam­i­lies because we’re one big fam­ily, we’re done for.”

You have to feel for the unfor­tu­nate offi­cials that are forced to impose this kind of aus­ter­ity. It’s not like they have a choice:

Greece vows to keep up deficit-busting drive, eyes pri­mary bud­get sur­plus this year

By Asso­ci­ated Press, Pub­lished: April 16

ATHENS, Greece — Greece’s finance min­is­ter pledged Tues­day to stick with unpop­u­lar aus­ter­ity mea­sures and cor­rect years of prof­li­gate state spend­ing, in the hope of secur­ing a bud­get sur­plus this year that could pave the way for a new debt reduc­tion deal.

“We still face a hard road ahead, until Greece can access mar­kets again,” Yan­nis Stournaras told a press con­fer­ence. “But we have cov­ered at least two thirds of the way, as far as fis­cal adjust­ment goes, and three quar­ters of the way on competitiveness.”

Stournaras was speak­ing a day after Greece struck a deal with cred­i­tors expected to secure it 8.8 bil­lion euros in fur­ther loan pay­ments from its inter­na­tional cred­i­tors. The deal fol­lowed weeks of tough nego­ti­a­tions and will include a taboo-breaking 15,000 lay­offs in the pub­lic sector.

The min­is­ter told the press con­fer­ence Tues­day that the country’s next main tar­get is to achieve a pri­mary sur­plus — which excludes the cost of ser­vic­ing the huge pub­lic debt — on its bud­get in 2013, a year ahead of tar­get. Athens hopes that by reach­ing this mile­stone, it will get fur­ther debt relief from its creditors.

The coun­try has been locked out of inter­na­tional bond mar­kets after its econ­omy imploded in 2010, and been kept afloat by res­cue loans from its Euro­pean part­ners and the Inter­na­tional Mon­e­tary Fund. In exchange, it has imple­mented harsh and deeply resented aus­ter­ity mea­sures, slash­ing incomes, hik­ing taxes and over­haul­ing an inflated, largely inef­fi­cient pub­lic sector.

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